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Cities with Stable Population Outperform Fast Growing Cities

Metro areas in the U.S. with a stable population are proving growth is not the path to prosperity. Eben Fodor, community planning consultant and author of Better, Not Bigger, has just released a study comparing the fastest-growing metro areas of the U.S. with the slowest-growing, to test conventional wisdom that cities benefit from growth. This study ought to put the final nail in the coffin of the “grow or die” myth that misinforms public policies in many cities. Unfortunately, in most areas this myth is very much alive and well.

According to Fodor, “The slowest-growing MSAs (Metropolitan Statistical Areas) outperformed the fastest-growing in every category. The 25 slowest-growing MSAs averaged almost 1% lower unemployment rates, 2.4% lower poverty rates, and a remarkable $8,455 more in per capita personal income in 2009. They also had larger income gains from 2000 to 2009 and saw significantly lower declines in income from the recession (2007-09). “

Excerpts from Eben Fodor interview in the upcoming documentary, GrowthBusters

The myth that growth leads to prosperity was also busted by this study, which revealed a decline of almost $2,500 in per capita income for each 1% increase in growth rate. A metro area with a stable, non-growing population would tend to see a 43% higher income gain than an area growing at 3% per year. And faster growth did not correlate to lower unemployment.

This takes the wind out of the sails of many local economic development bodies who do the bidding of growth profiteers (real estate developers, homebuilders, construction industry, mortgage banking, etc.). In my hometown, the Colorado Springs Regional Economic Development Corporation uses the job creation mantra to justify its requests for incentives and other public funding. This organization’s membership is dominated by the special interest growth industry. They are happy to have public growth subsidies boost the area’s population, thus increasing demand for new homes, mortgages, freeways, etc. They get publicly funded subsidies based on the myth that they bring jobs to the community.

According to Fodor, “There is no clear employment benefit shown from faster growth. There may be new jobs created as a result of growth, but apparently there are more newcomers and job seekers moving in than there are new jobs being created. The result is that local unemployment rates remain more or less the same, but the number of unemployed people increases with growth.”

The data show the fastest-growing metro areas were hardest hit by the recession. Many of the fastest-growing MSAs from 2000 to 2009 had income declines of 6% during the recessionary period from 2007 to 2009. Slower-growing areas fared much better. Many areas with stable or declining populations actually saw increases in personal income.

My read on the recession figures is the collapse caused the growth addicts to crash. Those not addicted fared much better. What can we learn from this? What kind of prosperity strategy might suit your community during this century as we bump up against the limits of resources like fresh water, fossil fuels and fertile soil?

Finally, the Fodor study found higher growth rates correspond to higher poverty rates. Strike three for the growth=prosperity myth. 

The study, Relationship between Growth and Prosperity in 100 Largest U.S. Metropolitan Areas, compared the 25 fastest-growing metro areas with the 25 slowest growing. The fastest growing averaged 2.7% annual growth during the study period. The slowest growing MSAs were essentially stable populations, averaging less than .1% annual growth. This would indicate population stability makes very sound economic sense – for cities, for nations and for the world.

Dave Gardner

Dave Gardner is producing the non-profit documentary, GrowthBusters: Hooked on Growth
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